letter of credit

noun

1. an order issued by a banker allowing a person named to draw money to a specified amount from correspondents of the issuer.
2. an instrument issued by a banker authorizing a person named to make drafts upon the issuer up to an amount specified.

letter of credit

noun

1. a letter issued by a bank entitling the bearer to draw funds up to a specified maximum from that bank or its agencies
2. a letter addressed by a bank instructing the addressee to allow the person named to draw a specified sum on the credit of the addressor bank

Word History and Origins

Origin of letter of credit¹

First recorded in 1635–45